1 Estimating Growth There are three ways to estimate growth

1. Estimating Growth – There are three ways to estimate growth rates for earnings, revenues, and dividends. These include (1) the growth rate of the firm’s past (operating) earnings, (2) obtain the information from analysts, and (3) estimate the rates from the firm’s fundamentals. Using each of these methods, what is your estimate of the growth rate for google?

Solution

The net income for google over the past five years alogng with the growth rate calculation is as shown in the below table:

So, the estimate for growth rate of Google Inc. is 2.36%